Australia Post is preparing to raise the cost of sending bulk mail and parcels by 3.8%, with some retailers saying the changes are being introduced during the middle of existing contract terms.
The move comes as Australia Post struggles to deal with the influx of parcels fuelled by the rise of online retail, with shoppers complaining of limited storage capacity in AusPost outlets causing backlogs, and the frustration with not being able to pick up parcels after-hours.
Get daily business news.
The latest stories, funding information, and expert advice. Free to sign up.
According to a letter being sent to Australia Post clients and seen by SmartCompany, the organisation claims that it is “operating in a challenging business environment with increasing external costs”.
“As such, on 2 April 2012 we will be increasing the prices of bulk mail and parcel services by a weighted average of 3.8%.”
These letters have been distributed during the past fortnight.
One business, which chose to remain anonymous, said the changes were an “annoyance”, and attacked AusPost for introducing the hikes during the middle of a contract.
Australia Post was contacted this morning by SmartCompany, but it was unavailable to reply prior to publication.
However, it later confirmed the increase was advertised to customers on February 29, and said that price increases can occur for contract customers as this provision is included in their terms.
“The April price increase represents an average rise of 3.8% for bulk mail and parcel services, and is due to increasing external business costs associated with providing a world-class service to our customers.”
“We’re also experiencing record volumes of parcels being sent across our network and internationally, driven by growth in online shopping.”
Australia Post also confirmed the changes won’t afect the basic postage rate price of 60 cents.
Sources have confirmed to SmartCompany the letter is being sent to multiple retailers, and in some cases, representatives have visited individual businesses in order to explain the changes – especially as to why they’re being raised mid-contract.
A new price schedule is currently being sent out, according to the letter, which also spells out a number of investments being made for the 2012-13 year.
These include 24 hour access parcel lockers in Melbourne, Sydney and Brisbane, 70 upgraded business hubs, new self-service machines at five retail outlets and new super stores.
Parcel Express chief executive Jason Picknell says he expects consumers will see prices increase soon enough, and also notes more changes have been made including certain categories of post being scrapped, such as the 250g letters.
“The people who are going to be most affected are small to medium sized business,” he says. “My letter came about two weeks ago.”
However, Picknell says he understands why the changes must be made, given the shift to parcels during the past few years.
“It’s a business, and it’s going to be priced accordingly.”
Australia Post has been under intense pressure to keep up with the pace of online shopping, which is overwhelming distribution centres with large and bulky parcels. Last year, it confirmed about 70% of parcels are being purchased through online retailing, and announced after-hours locker services for consumers to pick up products for when it best suits them.